On February 14, 2022, VIP Research Institute, a professional research and advisory institution in the high-end consumer sector in China, released the 2022 China Luxury Report, which is the 13th consecutive year that VIP Research Institute has released this report. Dr. Zhou Ting, chief researcher of the report and president of VIP Research Institute, believes that high-end consumption with luxury goods as the core is the main driving force for domestic demand in China.
In 2022, China's luxury brand market experienced negative growth for the first time
In 2022, the global luxury market further recovered, achieving a rapid growth of 17% year-on-year, and the market size reached 2,545 billion yuan. The global luxury market has completely walked out of the haze of the epidemic and achieved rapid development, especially for the head luxury brands. According to the annual performance report of 2022, the average market size has increased by more than 30% compared with that of 2019 before the epidemic.
In 2022, the sales of Chinese luxury goods market decreased slightly by 4% compared with 2021, and finally reached 956 billion yuan, although the proportion of the global luxury goods market decreased, it is still as high as 38%, and Chinese people are still the most important force in the global luxury goods consumption.
Due to the long-term containment of the epidemic and the influence of various unstable factors in consumer confidence, China's domestic luxury goods market experienced a negative growth of 15% for the first time in 2022, with sales of only 547.5 billion yuan, and the proportion of the global luxury goods market dropped to 22%, giving up the position of the world's largest luxury goods consumer market.
In 2022, the proportion of luxury goods consumption in China has dropped to 57%, and 43% of luxury goods consumption by Chinese people still takes place outside China. The epidemic has affected consumers' shopping abroad, but it has not affected the consumption of daigou and Chinese people living abroad, nor has it affected Chinese consumers' consumption of luxury goods through various overseas platforms.
Be objective:
In 2023, Chinese shopping abroad will gradually recover, but it will not be particularly obvious. With the two-way recovery of domestic and foreign luxury consumption, the proportion of Chinese luxury consumption at home and abroad will remain at about 6:4 in 2023, and China's domestic luxury consumption will still exceed that of overseas.
Further oligopolization of the global luxury goods industry in 2022
Three years after the epidemic, the degree of brand concentration in the global luxury market has been further improved, and the strong are stronger and the weak are weaker. LVMH Group will achieve global sales of 578.6 billion yuan in 2022, accounting for 23% of the global luxury market, and the channel advantages, communication advantages and supply chain advantages brought by scale effects will continue to exert strength. VIP Research Institute predicts that in the future, LVMH Group is expected to continue to outperform the growth rate of the global luxury market, and the proportion of LVMH Group's sales in the global luxury industry market is expected to further increase.
Similarly, Hermes, Chanel and other leading luxury brands have also achieved a far higher growth rate than the entire industry, and their market share in the global luxury industry has gradually increased.
Consumption upgrading is the core driving force for the anti-market growth of the global luxury market during the epidemic. The three years of the epidemic are also the three years of rapid development of online media. Global consumers have more time to understand and contact various lifestyle education information, which makes people more acceptable and recognized for luxury consumption, and greatly promotes the growth of luxury consumption. The more high-end luxury brands, the more obvious the attributes of their own traffic, the easier it is to be reported and spread by various new media, and the easier it is to obtain the dividend of lifestyle education.
Diversification and popularization are also one of the reasons for the expansion of the market share of the leading luxury brands. The head luxury brands further gain ground in other category markets through diversification and popularization strategies, and further seize the downstream brand market, resulting in more non-head luxury brands to survive difficult or even difficult to sustain. About 22% of global high-end niche and designer brands have gone out of business during the pandemic, and more than 70% of brands have faced various types of survival difficulties.
Be objective:
The trend of brand polarization is further emerging, and many brands are experiencing brand high-end or brand popularization; There will be a trend of polarization in the traditional luxury camp, and the competition between the top luxury brands will be more intense, and many luxury brands will withdraw from the luxury camp.
In 2022, the online sales of China's luxury market will exceed 200 billion yuan
In 2022, online transactions in China's luxury market will continue to grow rapidly. Due to long-term closure, logistics are not smooth, prompting more offline consumption to shift to online. In 2022, the online trade of international luxury brands in China recorded a rapid growth of 31%, reaching 220 billion yuan. Luxury brands accounted for a record 40 per cent of online transactions in China, despite a 31 per cent decline in offline transactions.
The online layout of luxury brands is a common strategy for international luxury brands in China in 2022. Brand official websites, brand wechat mini programs, e-commerce platforms, and Tiktok have become a must-have for luxury brands. The content operation based on Tiktok, the event planning based on mini programs, and the circle marketing based on social software are the three highlights of the online business of international luxury brands.
Cross-border transactions of luxury goods are still one of the main growth points of the online luxury business. In particular, a large number of high-end niche brands will continue to enter the Chinese luxury market through online platforms in 2022, injecting a lot of new vitality into the Chinese luxury market. VIP Research Institute predicts that in the next 3-5 years, the international high-end niche brands entering the Chinese market are expected to contribute more than 10% of the market sales, and the total number of brands is expected to exceed 2,000.
Be objective:
The strategy of one store in one city and one network will become the core strategy for luxury brands to open stores in China. Many high-end niche brands, especially customized brands, will completely abandon the offline store model. "Online + experience store" will become the mainstream model of luxury retail, and shared experience centers will become a new highlight of China's high-end commercial real estate in 2023.
In 2022, the trend of high-end customers in China's luxury market has further emerged
In 2022, there will be about 5 million high-end consumers with net assets of more than 10 million yuan in China, accounting for only a little more than three thousand of the population, but contributing 82% of the luxury consumption market. At the same time, the consumption and services surrounding this group of people contribute to the total retail sales of social consumer goods of about 11 trillion yuan, accounting for about a quarter of China's total retail sales of social consumer goods.
China's consumer market is currently concentrated in four consumption levels, namely: high-end consumers' consumption upgrade, high-end consumers' life must, mass consumers' consumption upgrade, and mass consumers' life must. The first two markets are the main ones for luxury brands. Before the epidemic, luxury brands relied on the popularization strategy to achieve performance growth by serving more customers, which was challenged during the epidemic period and began to rely on high-end consumers again. The luxury market in China has changed from an incremental market to a stock market.
Be objective:
In the future, mass consumption will be more managed and regulated by the state, and the large platform will gradually benefit the people and become a social welfare security tool. High-end consumption will become the largest or even the only source of profits for many industries, and high-end consumption will contribute more than 95% of profits for many industries in China.
High-end development, and strive to become a luxury brand, especially to become a high-end brand, is the first choice of the leading brand in China's consumption and service industries. The future impact of international luxury brands on the Chinese market will put many Chinese brands in trouble.
